General Dynamics NASSCO, a wholly-owned subsidiary of General Dynamics (NYSE: GD), has reached an agreement with the U.S. Navy for options to build up to five additional T-AKE dry cargo ammunition ships. Contracts for the ships, valued at approximately $2.5 billion if all options are exercised, are expected to be awarded over the next four years.

Including the nine ships previously under contract, this agreement means the San Diego shipyard would build a total of 14 T-AKE ships for the Navy.

"This agreement clearly provides the best value to the government and NASSCO," said Frederick J. Harris, president of General Dynamics NASSCO. "The Navy-NASSCO team can now focus on building and delivering T-AKE ships as efficiently as possible."

Since October 2001, NASSCO has received contracts to build nine T-AKE ships and delivered the first three ships of the class. The fourth T-AKE ship is scheduled to be delivered in November. Under the new agreement, NASSCO would deliver the fourteenth ship in the fourth quarter of 2014.

NASSCO has incorporated international marine technologies and commercial ship-design features into the T-AKE class, including an integrated electric-drive propulsion system.

The ships can deliver more than 10,000 tons of food, ammunition, fuel and other provisions to combat ships at sea.

T-AKE ships are replacing single-mission ships that are reaching the end of their service lives.

General Dynamics NASSCO employs more than 4,600 people and is the only major ship construction and repair yard on the West Coast of the United States. In addition to the four T-AKE ships currently under construction, NASSCO will soon begin construction on the first of nine product carriers for U.S. Shipping Partners L.P.